Posted by: knightbird | March 20, 2015

A Strategic Direction for Alaska

At a lunch conversation with some Alaska business leaders, I tried to explain my vision for making Alaska competitive. Of course it involved adoption Lean Thinking. I have examined issues that are being discussed about our state’s income issue, crime, housing, education and business development through a Lean Thinking lens. Some issues I can’t resolve, but I park them in a treasure chest because I believe we can put Alaska in a posture to discuss those issues (mainly revenue related) in a civil environment.

My first Vision is that of a very efficient state government addressing critical issues with Lean Government. With 24,000 people employed by the state of Alaska, We should be able to achieve about $500 million in savings without diminishing program effectiveness. It’s only a matter of time before we get a gubernatorial candidate who has the leadership to advocate for the change. Many governors and mayors in the Lower 48 have pressed forward with good success. Of course they have their detractors. Tough. There are detractors for everything, and we need to find a governor with the ability to understand the powerful impact Lean Thinking can have on our finances. Our state services are riddled with waste.

If our state utilizes Lean Government, then our political subdivisions should follow suit. While our education budget debates focus on teachers and professors, the plain fact is that we have more support staff in the Anchorage School District than we do teaching staff. And our teaching staff is burdened by many wasteful requirements. The University of Washington has adopted Lean Education with considerable success. At one conference, they represented achieving $85 million in savings. That means for every year they operate, they aren’t spending $85 million. That’s how Lean Thinking works. When you eliminate waste, you eliminate the cost of that waste.

Local governments can effective utilize Lean Government as well. Denver, CO and King County, WA are just two examples. One explanation I offered to the business leaders about why immediate cost savings can’t be realized in the budget is this: most government services claim to be underfunded by at least 20%. As they improve, the need to get a handle on both the backlog they have and the work that isn’t being taken on. Employees have work left undone because of the requirements for reporting and inquiries by politicians. It’s pretty standard for the public to complain when they don’t get good service. That leads to an inquiry by politicians and orders to get it done. I maintain that political interference leads to a less stable system with greater variation. And politicians demand reports that have no literal value.

Once the unfinished work and backlog are caught up, there is a lot of kaizen still needed to improve the system as a whole. But with improving services come amazing opportunities to actually meet customer demands. As complaints decline and services improve, the benefits expected for those services should help customers become more effective and efficient. Think about the process for securing building permits or driver licenses. Less time spent in line means more time for other tasks. One byproduct of eliminating waste is gaining an ability to see solutions for problems rather than just putting out fires caused by bad processes. IF the service is truly necessary and worthwhile, this period of time will allow for focusing on resolving the problems associated with the service. This is a prime reason why we cannot take jobs from the improving organization. If they have excess employee capacity, we can assign that capacity to improvement events in other parts of the whole organization. If there is a resignation, retirement or disciplinary termination, we can eliminate the position and take the savings.

So we end up with a more productive government, and more effective educational institutions—secondary and post secondary. If our faculty starts learning how to find and address root causes of problems—practical applied research, then maybe we increase our quality of life through behavioral Never Events. Reducing domestic violence, rape, crime in general, depression, alcohol abuse and other common issues might become a true focus.

The third part of the vision involves savings that come from solving problems, or recognizing “Never Events.” Think of a Never Event this way, it the Event happens, it will cost us. If it doesn’t happen, it will not cost us. Medical care is a great place to explain this. If a medical error never happens, the patient does not suffer, staff does not have to invest in cleaning up after the error, and everyone wins. Washington State’s investment in addressing developmental trauma allowed for $52 million in savings from Never Events. Teens didn’t drop out of school, go to jail, draw welfare and became tax-paying residents. That’s a great Never Event, and if replicated biannually (their budget cycle), generates considerable savings. If Alaska can encourage Never Events for its juvenile and criminal justice systems, we have huge savings potential.

I believe some intangibles will result from government action. Our communities will become better places to live. If our public utilities become more efficient, we will have fewer outages and lowered costs. With savings, perhaps our politicians will invest in recreation and amenities that increase satisfaction. I have advocated for the use of Predictive Policing in Anchorage. Imagine the satisfaction if we can reduce incidences of crime by as much as 20%. Insurance costs could go down. Satisfaction could go up.

The fourth part of my vision has our business community adopting Lean Thinking rapidly. If the University of Alaska and Alaska Pacific University add Lean Management to its core business curriculum, we can train a generation of leaders who will move away from the tired old management practices that have cost us so much in employment because we can’t compete with Lean businesses. For example, one homebuilder in Texas is able to complete a new home in 30 days. We could actually bring down the price of housing and make it more affordable for Alaskans with Lean Construction.

The fifth part of my vision engages Lean Healthcare and true prevention for an eventual reduction of as much as 50% of the costs of health care. Imagine the possibilities. If health care costs go down, then businesses become more competitive. I truly believe this is possible. It’s a realistic vision.

Maybe we end up like Finland, with a well-educated workforce capable of world-class competitiveness. Or like Denmark with businesses like Lego.

Now we just need a starting point. That’s what I have been working towards. At this years Alaska State Chamber conference in Fairbanks, we have an opportunity to start educating Alaska’s business leadership. It’s a start. But when I sponsored and put together Alaska’s only Lean Healthcare conference in 2007, I had really high hopes that the message would resonate. It did not. It’s now 8 years later, and I am still hoping that the spark with light a fire.

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